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Congress passes 'CHIPS+' bill, withstanding last-minute opposition push

The CHIPS Act finally has funding after its initial passage in 2020. It now heads to President Biden's desk for the final signature.

AUSTIN, Texas — After 18 months, Congress passed the CHIPS Act, sending it to President Joe Biden for a final signature. 

The 243-187 vote had bipartisan support with 24 House Republicans joining Democrats to pass the legislation. On Wednesday, the Senate passed the bill with both bipartisan support and opposition, 64-33. A late-night push by House Republican leadership to oppose the bill threatened its passage after Sen. Joe Manchin (D-West Virginia) announced his support for a climate and tax bill.

"There is zero reason for @HouseGOP to support the CHIPS Act - either on the merits or after this ridiculous reconciliation package spending billions," Rep. Chip Roy (R-Austin) said on Twitter Wednesday night.

The bill provides billions of dollars for production and innovation, incentivizing companies to bring their manufacturing facilities back to the U.S.

A total of $39 billion will be made available as incentives to chip-makers like Samsung, NXP and Infineon in Austin. An additional $13 billion will be up for grabs for innovation and research. Political leaders tout the bill as investing in the American economy well into the future. Industry leaders say this is the necessary push to help make the U.S. semiconductor independent.

Semiconductor chips are in most modern technologies from phones to fighter jets to checkout machines at the grocery store. 

"It is the brain behind things, but it is also the power," Steve James, the VP of Infineon's Fab 25 in Austin, said. "It is a sensor reading the temperature or the humidity or pressure or anything that they're driving, the displays we look at. They're driving the motors that move things around, the electric motor. So everything that moves electricity around for both for information and for, you know, for power, for sensors. All of it comes through semiconductors."

Sen. John Cornyn (R-Texas) led the push for CHIPS Act, passing it in December 2020, then celebrating the passage of the funding in the Senate on Wednesday. The $52 billion will come from the U.S. Department of Commerce and companies will be able to apply for funding after the bill is signed.

"These are, you know, $15-$20 billion facilities, total investment to manufacture computer chips from Ohio to Dallas to Arizona to Oregon to Austin," Robb Misso, who started in the semiconductor industry in 1991, said. "There's a lot of key factories being built in the United States today that historically would probably have been built in Asia or somewhere considered a lower cost. And I think that's been driven by our politicians."

Gov. Greg Abbott also called it "great news."

"This legislation will leverage our state's investments in the semiconductor industry and encourage more companies to operate in the Lone Star State! Texas will continue to lead America in economic growth and innovation," he said on Twitter. "Since the 1990s, Taiwan and China, specifically, have invested heavily in semiconductor production. At that time, the U.S. manufactured 38% of the world's chips. Now, the U.S. only makes approximately 12% of the world's chips."

"Less than 5% of the chips that pass through our laboratories are made in the U.S.," Mark Pollard, COO of Astute Electronics, said.

RELATED: With no short-term way to solve chip shortage, distribution companies offer a solution

Astute Electronics redistributes chips from companies that have a surplus to those who need them. Pollard's staff inspects the quality of chips before passing them on to other companies. 

"We're kind of the police of that, a safety net for our customers in addition to getting them the parts they need for their production," Pollard said.

Industry experts like Pollard say this investment is a great start but needs to continue in order to catch up to the production of Taiwan and China. Taiwan makes 90% of the world's advanced semiconductor chips that power the most advanced technologies. China makes up the rest. The U.S. makes none. 

"I believe that the current package, the current plan is just to keep us where we are today," Pollard said. "The net effect of the dollars that are going to this infrastructure will probably just keep us in the same place."

What the U.S has lacked in production, has always led in semiconductor innovation. The "modern semiconductor" was first created by Texas Instruments in the Dallas area about 50 years ago. Since then, companies with roots in America have led the development of newer and better chips before production gets boosted around the world at a lower cost.

"Texas really started the whole revolution," Dr. Sanjay Banerjee, a University of Texas researcher who started his semiconductor career at Texas Instruments, said. "Central Texas over the years has played a major role in terms of manufacturing of semiconductor chips. We used to have companies like Motorola, AMD. And now we have Samsung, NXP."

AMD still has facilities in Austin but has transitioned more to design than the production of chips. Motorola eventually turned into NXP.

"We believe this important legislation will have a significant positive impact on supply chain security, particularly to the extent it will be used to support capacity expansion at the feature-rich legacy semiconductor nodes that are so critical to U.S. industry and national security," NXP said in a statement.

While Texas politicians led the fight for the CHIPS Act legislation, only two House Republicans from Texas approved the bill, Rep. Michael McCaul (R-Austin) and Rep. Kay Granger (R-Fort Worth).

The bill now goes to President Biden's desk, where he is expected to sign the legislation into law.

"I look forward to signing this bill into law and growing our economy from the bottom up and middle out for working families all across the country," the President said in a statement.

Ed Latson, executive director of the Austin Regional Manufacturers Association, released the following statement:

“This bipartisan legislation is an enormous win for domestic manufacturing and for Central Texas specifically, where we are home to multibillion-dollar investments from leading global semiconductor companies.

"There is no doubt that this legislation will have a significant impact to our local and regional economy, creating new high-paying jobs in small, mid-size and large companies alike. The funds in this bill will allow for the construction of new factories, while older facilities are upgraded with new technology.

"Most importantly, Central Texas will lead American in developing semiconductors and semiconductor equipment. The productivity of the manufacturing sector will strengthen the U.S. economy, and give our military and defense establishment strategic security.

"The pandemic and recent supply chain shortages have made clear how important it is to produce chips domestically. Central Texas already has more than 65,000 manufacturing jobs, and we expect that figure to increase at least 30 percent in the coming years. The regional gross domestic product of manufacturing is $18.9 billion. When semiconductor companies invest in Texas, they provide millions of dollars to the local economy through taxes, fees, jobs and economic stimulus.

"ARMA is proud to support the CHIPS Act, and thanks Sen. John Cornyn, Congressman Michael McCaul, Gov. Greg Abbot and the Texas delegation for their continued support of the industry.”

Tony Bennett, president & CEO of the Texas Association of Manufacturers, also released a statement:

“Congress strengthened the economic and national security for the United States today by passing the CHIPS Act to encourage domestic semiconductor manufacturing. This legislation is essential because semiconductors power almost every aspect of our lives and the chip shortage cost the U.S. economy more than $200 billion last year alone. Expanding manufacturers’ ability to make the products Americans need on American soil is good news for everyone.”

And Infineon's statement can be read below:

“As supply chain resilience becomes increasingly important, Infineon welcomes policies to support the semiconductor industry ecosystem regionally. Regarding CHIPS, Infineon applauds U.S. policy makers for establishing incentives for semiconductor companies to grow locally in the United States. Now the task for the U.S. government is to quickly put the CHIPS program into action.” 

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